Play Ball: MLB and the WTO

With the U.S. professional baseball season under way this week, I was happy to come across a reason for a blog post about baseball. A Time magazine article reports that Japan's professional baseball league is complaining about the trade impact of Major League Baseball (MLB), after MLB opened its season with two games in Japan:

While Japanese fans cheered the lightning series, the country's baseball organization, the Nippon Professional Baseball league (NPB) grumbled. Its best players are migrating to the States. American games are cutting into the Japanese pastime's TV ratings. And now this latest spit in its eye just as NPB opening week commenced. Complained Yomiuri Giants pitching star Koji Uehara, "We're just starting our season. So why does the MLB have to come to play here. There's nothing to be gained from this." Added a Japanese professional baseball official, who wished to remain anonymous, "Every time the MLB holds one of their openers in Japan, sales of our opening week tickets go down.... We see more and more empty seats. It's not necessary for the big leaguers to come here."

As the article explains, it's not just the competition that annoys the Japanese, it's the alleged unfair nature of the competition:

NPB teams lack what might be called the "trade advantages" of their North American counterparts, namely, stadium subsidies, salary depreciation allowances and the anti-trust exemption which helps free up millions upon millions of dollars for MLB teams to spend on raiding Japan's top stars. Most MLB teams use stadiums for little or nothing, having strenuously convinced the cities they play in to build new facilities for them. By contrast the Tokyo Giants pay $250,000 a game to use the Tokyo Dome, while the Softbank Hawks pay $40 million dollars a year to use a similar facility in Fukuoka. Says one longtime observer of the situation, "The NPB should file a grievance with the WTO [the World Trade Organization]."

There are a couple points here. First, stadium subsidies. This one is well known. Many professional U.S. sports teams are able to convince local governments to fund most, if not all, of the cost of their fancy, new stadiums. There are plenty of complaints about this practice on the merits of the policy (e.g., wouldn't the money be better spent on education?), but there is also a trade impact. This impact is most directly felt by the other cities that are competing for a franchise, but in addition, according to Japan at least, there is an international impact on competing leagues as well.

Second, salary depreciation. I'm not really sure about the specifics of this one, although I assume it involves special tax treatment of player salaries. In essence, another subsidy.

Third, baseball's antitrust exemption, which is also well-known. On this one, I'm in the minority who take the view that MLB should be treated as a single entity, and thus allegations of antitrust violations involving horizontal restraints (such as team owners acting jointly to prevent another franchise from moving) should be rejected. As a result, I don't view this exemption as all that significant. For those who take a different view (most people), the antitrust exemption can lead to a significant advantage for MLB.

So is there a WTO complaint in there somewhere? I don't really see it, especially given that GATS rules don't have an effective remedy for subsidies that are given to services. There are the GATS Article XV:2 consultations provisions, but those don't seem to go anywhere concrete.

Finally, there are some practical limits to the competition from MLB:

And so what's next for the American invaders? Might the MLB be contemplating a Japan division to field teams against its National League and American League in the U.S.? The rumors to that effect exist because the Yomiuri Shimbun, the huge newspaper that also owns its own baseball team, was a major sponsor of the Boston-Oakland series and was responsible for the timing of the games to coincide with the local leagues' opening week — which the NPB found so obnoxious. Could Japan be further drawn into the American baseball empire? Well, maybe not. Says Masaki Nagino, planning director of the NPB's Central League: "Not just yet, if you consider the logistics. It still takes 11 hours to fly across the Pacific and as long as that holds, that's our protection."

So perhaps Japan does not have that much to worry about. Actually, I think the competition could go the other direction. Remember, there used to be three New York baseball teams. Now, with a substantially bigger market, there are only two. Maybe Japan's baseball league could set up a couple franchises over here, in New York and other big cities. (If the Japanese league were not given an antitrust exemption of its own, that could be a WTO violation, of course.)

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Play Ball: MLB and the WTO

With the U.S. professional baseball season under way this week, I was happy to come across a reason for a blog post about baseball. A Time magazine article reports that Japan's professional baseball league is complaining about the trade impact of Major League Baseball (MLB), after MLB opened its season with two games in Japan:

While Japanese fans cheered the lightning series, the country's baseball organization, the Nippon Professional Baseball league (NPB) grumbled. Its best players are migrating to the States. American games are cutting into the Japanese pastime's TV ratings. And now this latest spit in its eye just as NPB opening week commenced. Complained Yomiuri Giants pitching star Koji Uehara, "We're just starting our season. So why does the MLB have to come to play here. There's nothing to be gained from this." Added a Japanese professional baseball official, who wished to remain anonymous, "Every time the MLB holds one of their openers in Japan, sales of our opening week tickets go down.... We see more and more empty seats. It's not necessary for the big leaguers to come here."

As the article explains, it's not just the competition that annoys the Japanese, it's the alleged unfair nature of the competition:

NPB teams lack what might be called the "trade advantages" of their North American counterparts, namely, stadium subsidies, salary depreciation allowances and the anti-trust exemption which helps free up millions upon millions of dollars for MLB teams to spend on raiding Japan's top stars. Most MLB teams use stadiums for little or nothing, having strenuously convinced the cities they play in to build new facilities for them. By contrast the Tokyo Giants pay $250,000 a game to use the Tokyo Dome, while the Softbank Hawks pay $40 million dollars a year to use a similar facility in Fukuoka. Says one longtime observer of the situation, "The NPB should file a grievance with the WTO [the World Trade Organization]."

There are a couple points here. First, stadium subsidies. This one is well known. Many professional U.S. sports teams are able to convince local governments to fund most, if not all, of the cost of their fancy, new stadiums. There are plenty of complaints about this practice on the merits of the policy (e.g., wouldn't the money be better spent on education?), but there is also a trade impact. This impact is most directly felt by the other cities that are competing for a franchise, but in addition, according to Japan at least, there is an international impact on competing leagues as well.

Second, salary depreciation. I'm not really sure about the specifics of this one, although I assume it involves special tax treatment of player salaries. In essence, another subsidy.

Third, baseball's antitrust exemption, which is also well-known. On this one, I'm in the minority who take the view that MLB should be treated as a single entity, and thus allegations of antitrust violations involving horizontal restraints (such as team owners acting jointly to prevent another franchise from moving) should be rejected. As a result, I don't view this exemption as all that significant. For those who take a different view (most people), the antitrust exemption can lead to a significant advantage for MLB.

So is there a WTO complaint in there somewhere? I don't really see it, especially given that GATS rules don't have an effective remedy for subsidies that are given to services. There are the GATS Article XV:2 consultations provisions, but those don't seem to go anywhere concrete.

Finally, there are some practical limits to the competition from MLB:

And so what's next for the American invaders? Might the MLB be contemplating a Japan division to field teams against its National League and American League in the U.S.? The rumors to that effect exist because the Yomiuri Shimbun, the huge newspaper that also owns its own baseball team, was a major sponsor of the Boston-Oakland series and was responsible for the timing of the games to coincide with the local leagues' opening week — which the NPB found so obnoxious. Could Japan be further drawn into the American baseball empire? Well, maybe not. Says Masaki Nagino, planning director of the NPB's Central League: "Not just yet, if you consider the logistics. It still takes 11 hours to fly across the Pacific and as long as that holds, that's our protection."

So perhaps Japan does not have that much to worry about. Actually, I think the competition could go the other direction. Remember, there used to be three New York baseball teams. Now, with a substantially bigger market, there are only two. Maybe Japan's baseball league could set up a couple franchises over here, in New York and other big cities. (If the Japanese league were not given an antitrust exemption of its own, that could be a WTO violation, of course.)